Skyrocketing home values and mortgage rates have put homeownership out of reach for many homebuyers.
A typical monthly payment for a single-family home with a 20-percent down payment has increased by 50 percent since last year, according to the National Association of Realtors.
Among first-time homebuyers, 9 percent are Black, 11 percent are Asian American, 14 percent are Hispanic and 66 percent are white, according to 2022 first-time homebuyer statistics from Bankrate.com.
While most states have down payment assistance programs, some banks are setting aside money in the form of forgivable grants that can be used to help first-time homeowners.
Atlanta-based Ameris Bank, a publicly traded company, announced in a press release that it has committed $10 million in grants over the next three years to eligible first-time homebuyers for help with down payments and closing costs.
Qualified borrowers can get up to $12,500 in forgivable grants that may be combined with other federal, state and local grant programs. Homebuyers under the program must go through homebuyer education to prepare for homeownership.
“Especially given today’s tough housing market, the objective of this program is to reduce barriers to homeownership and strengthen communities,” said Palmer Proctor, CEO of Ameris Bank, in a prepared statement. “This program will provide hundreds of low-to-moderate income homebuyers in underserved communities, including minority communities, with funding and education assistance to help them achieve homeownership.”
Kasondra McConnell, a real estate agent at Keller Williams Buckhead, provided more details about the program, which she described in a tweet as “super exciting.”
“Here are the requirements,” McConnell tweeted: “Eligible first-time homebuyers can receive up to 4% of the purchase price, with a max of $12,500, to use towards their down payment and closing costs.2 The assistance is provided in the form of a second mortgage that is forgivable in full after 5 years in the home.
“Funds are only eligible to use in conjunction with a Fannie Mae HomeReady® or Freddie Mac Home Possible® first mortgage program originated through Ameris Bank. Those programs offer down payments as low as 3%.
“Homebuyer education programs are required to set up buyers for success. Property must be the homebuyer’s primary residence. Borrower must contribute $500.00 from their own funds. Borrower must be a first-time homebuyer.”
Homeownership by first-time home buyers has been increasing. In 2021, 34 percent of homebuyers were first-time homebuyers, an increase from 31 percent in 2020.
Several states have also announced additional funding for down payment assistance programs, CNBC reported:
- Maryland Gov. Larry Hogan boosted funding for the state’s “SmartBuy” program for low- and moderate-income earners saddled with student loan debt. It pays off 15 percent of the home purchase price or $50,000 in student debt — whichever is lower. To help cover down payments and closing costs, the SmartBuy program also offers a zero-interest loan option worth up to 6 percent of the mortgage cost.
- Connecticut’s home buyer assistance program Time to Own offers a 10-year interest-free loan worth up to $50,000 in select areas. Eligibility is based on residence status, income and ability to pay off the mortgage.
- Florida’s a “Hometown Heroes” program offers zero-interest loans worth up to $25,000 for frontline community workers in more than 100 eligible professions, including child-care workers, law enforcement officers, educators, healthcare professionals and active military or veterans. Eligibility is based on income and other things.
Other forms of homeowners assistance are offered by the United States Department of Housing and Urban Development (HUD), which lists resources and programs by state. For each state, select “Learn About Homeownership” for more information.